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HomeMy WebLinkAbout3138ORDINANCE NO. 3138 AN ORDINANCE of the City of Port Angeles, Washington approving the transfer and assignment of the Cable Television Franchise Ordinance No. 3116 to operate a cable television system in the City of Port Angeles and the Fiber Optic Wide Area Network Use Agreement to fast -track construction of a portion of the institutional network by Northland Cable Television, Inc. to WaveDivision III, LLC and the subsequent transfer of control to Wave Division Holdings, LLC. WHEREAS, by Ordinance No. 3116, the City Council of Port Angeles ( "the Franchising Authority ") adopted that certain Franchise Ordinance, passed May 21, 2002, granting to Northland Cable Television, Inc. ( "Northland ") the authority to install, construct, operate and maintain a cable communications system within the City of Port Angeles (the "Franchise "); and WHEREAS, by entering into the Fiber Optic Wide Area Network Use Agreement, dated as of August 27, 2002 and as amended by First Amendment to Fiber Optic Wide Area Network Use Agreement (the "First Amendment "), dated as of January 21, 2003 (collectively, as so amended, the "WAN Use Agreement "), the City and Northland agreed to complete a portion of the institutional network permitting commercial and noncommercial uses in advance of the Franchise required completion date; and WHEREAS, Northland has entered into a purchase and sale agreement (the "Purchase Agreement ") with WaveDivision Networks, LLC, a Washington limited liability company, for the sale of Northland's cable television system serving the City of Port Angeles, Washington ( "the City "), and for the assignment and transfer of the Franchise and WAN Use Agreement to WaveDivision III, LLC, a Washington limited liability company ( "Wave" or "Transferee ") and the subsequent sale of all of the ownership interests in Wave to WaveDivision Holdings, LLC, a Delaware limited liability company ( "Holdings" or "Transferee "), such assignment and transfer of the Franchise and the WAN Use Agreement to Wave and the subsequent sale of the ownership interests in Wave to Holdings being collectively hereinafter referred to as the "Transaction ", which Transaction is expected to close within forty -five (45) days of the adoption of this Ordinance; and WHEREAS, an FCC Form 394, proforma financial statements, and documents providing evidence of owner's equity and debt financing were filed with the City that demonstrate Wave's and/or Holdings' financial, technical and legal qualifications to satisfy all Franchise obligations; and WHEREAS Northland, Wave and Holdings request that the assignments and transfers of the Franchise to Wave and the ownership interests in Wave to Holdings be approved in accordance with the Franchise. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES DOES HEREBY ORDAIN as follows: Section 1. The City hereby approves and consents to the assignment and transfer of the Franchise and the WAN Use Agreement from Northland to Wave, effective as of the date of the actual transfer, and the subsequent sale of all of the ownership interests in Wave to Holdings, subject to the terms of this Ordinance. Section 2. The City hereby consents to and approves Wave's granting a security interest in all of Wave's rights, powers and privileges under the Franchise, the WAN Use Agreement and all of its other properties to such lender or lenders (as may be designated by Wave) for financing purposes, and Holdings' grant of a security interest in its rights in and to Wave to such lender or lenders, under which such lender or lenders shall have the rights and remedies of a secured party under the Uniform Commercial Code of this State. Section 3. Except as specifically set forth herein, the assignments and transfers of the Franchise and WAN Use Agreement and ownership interests in Wave shall not alter, affect or otherwise change any of the terms or conditions of the Franchise or the WAN Use Agreement. The terms and conditions of the Franchise and the WAN Use Agreement shall include the First Amendment to the WAN Use Agreement. Section 4. In connection with the assignments and transfers described in Section 1, the City certifies to Northland, Wave and Holdings that: (a) The Franchise, the WAN Use Agreement, and the First Amendment to the WAN Use Agreement were duly and validly issued by the City, and upon their assignment to Wave, the duly authorized franchisee will be Wave. (b) The Franchise and the WAN Use Agreement, as amended by the First Amendment, are in full force and effect as of the date hereof, are valid and enforceable in accordance with their terms, and will not expire until May 31, 2017 and April 27, 2004, respectively. (c) No event of default under the Franchise or the WAN Use Agreement, and no event which could become an event of default with the passage of time or the giving of notice, or both, have occurred or are continuing as of the date hereof. Section 5. The Franchise, the WAN Use Agreement and this Ordinance were and are made, passed or adopted in accordance with the notice and procedure requirements of the laws of the State of Washington governing cities, and with the notice and procedure requirements prescribed by the City, and do not conflict with the laws, ordinances, resolutions and other regulations of the City, as presently in effect or as the same were in effect at the time the particular action was taken. However, Subsections 1 -10, 1 -11, 1 -12 and Section 7 as amended of the WAN Use Agreement shall modify the Franchise. Section 6. This Ordinance shall be deemed effective upon the closing of the assignment of the Franchise from Northland to Wave. Section 7. The Franchising Authority does hereby consent to the Transaction, effective immediately upon the closing of the Transaction, subject to: a. Strict compliance with the conditions set out in the acceptance form attached as Exhibit "A" to this Ordinance. b. Written acceptance of this Ordinance by Northland and Wave and Holdings as follows: i. Within either ten (10) days after passage of this Ordinance by the City Council or ten days (10) days after the Closing, whichever is later, Wave and Holdings and Northland shall file their written acceptance of this Ordinance with the City Manager. The acceptance shall be in the form attached hereto as Exhibit "A ". ii. Wave's and Holdings' and Northland's acceptances shall be contingent only upon the final closing of the Transaction, as provided in Subsection (d) below. Such acceptance shall be -3- otherwise unqualified and shall be construed to be an acceptance of all the terms, conditions and restrictions contained in this Ordinance. iii. Wave's and Holdings' or Northland's failure, refusal or neglect to file such written acceptance within such time shall constitute an abandonment and rejection of the rights and privileges conferred hereby. c. Denial of Consent to Transaction. If for any reason Wave and Holdings or Northland fails, refuses or neglects to file the written acceptance as provided in Subsection (b) including the performance bond and insurance as provided in Subsection (f), the City denies Wave's and Holdings' request for a change in control of the Franchise and/or consent to the Transaction, for failure to provide the completed acceptance, the performance bond or insurance in a satisfactory form as required herein and by the Franchise, as applicable. d. Automatic Nullification in Event of Failure to Close the Transaction or Closure on Materially Different Terms. In the event the Transaction which is the subject of this Ordinance is not consummated or does not reach final closure for any reason, or in the event such closure is reached on terms substantially and materially different to the terms described in the FCC Form 394 and subsequent information provided by Northland, Wave and Holdings and relied upon by the City, then this Ordinance, together with the written acceptance provided hereunder, shall be null and void. If the closure is upon terms which are substantially and materially different, Wave and Holdings shall resubmit their request for a change of control of the Franchise and the WAN Use Agreement. e. Reimbursement of Costs. Either Northland or Wave shall within thirty (30) days of the closing of the Transaction reimburse all direct, out -of- pocket costs the City incurred in analyzing and acting upon Transferee's request to consent to the Transaction, in an amount up to $5,900, based upon invoices. f. Performance Bond and Insurance. Wave and/or Holdings shall obtain and maintain at their cost and expense a performance bond and insurance in accordance with Sections 10.3 and 10.4 of the Franchise, respectively. Wave and/or Holdings shall provide the performance bond and insurance, in the form which has been previously approved by the City Attorney, concurrent with the filing of Exhibit A with the office of the City Clerk. g. Franchise Term. In the event Wave and/or Holdings fails to meet the requirements listed in Subsections 4.2.1 (1) (a -c) and 4.2.1 (2) of the Franchise, the term of the Franchise term shall be reduced from fifteen (15) years to five (5) years, in accordance with subsection 12.3 of the Franchise. -4- h. Telecommunications and Cable Modem Services. Wave and/or Holdings may provide Cable Modem Services in accordance with the Franchise subsection 5.3.3 and dark fiber services to retail service providers who have been authorized to provide such service pursuant to the City's Telecommunications Facilities Within Rights Of Way Ordinance without obtaining other City approvals. Before Wave and/or Holdings have the authority to provide telecommunications services, as defined under applicable federal and state law, Wave and/or Holdings will have to obtain the City's approval, to the extent required by applicable law, in accordance with Chapter 11.14 of the Port Angeles Municipal Code, Telecommunications Facilities Within Rights Of Way. In the event the law is revised as to the characterization of Cable Modem Service either by the FCC, courts or congress the City reserves the right to exercise its revised authority to regulate Cable Modem Services. Section 8. The Franchising Authority confirms (a) that the Franchise and the WAN Use Agreement held by Northland are valid and are in full force and effect, and (b) that Northland is materially in compliance with the Franchise and the WAN Use Agreement, and (c) the Franchise and the WAN Use Agreement including the First Amendment to the WAN use Agreement supersede all other agreements between Northland and the Franchising Authority and represent the entire understandings of the parties. PASSED by the City Council of the City of Port Angeles at a regular meeting of said Council held on the 18th day of February, 2003. APPROVED AS TO FORM: Craig D. Kn PUBLISHED: 2003- 02.ord Glenn Wiggins, Mayor ATTEST: , City Attorney Becky J. tong ity Cler February 23, 2003 - 5 - Exhibit A Written Acceptance of Consent to Change of Control of Ordinance No. 3116 TO: City of Port Angeles, Washington Ms. Becky Upton, City Clerk 321 East 5th Street Port Angeles, Washington, 98362 This is to advise the City of Port Angeles, Washington that WaveDivision III, LLC, a Washington limited liability company ( "Wave ") and WaveDivision Holdings, LLC, a Delaware limited liability company ( "Holdings ") (both referred to as the "Transferee ") and Northland Cable Television, Inc. or its successor entity ( "Northland "), hereby unqualifiedly accept Ordinance No. 3138 , passed by the City Council on February 18 , 2003, regarding the change in control of the Franchise (Cable Television Franchise Ordinance No. 3116) and the Fiber Optic Wide Area Network Use Agreement to the Transferee under the following terms and conditions: 1. Compliance with Franchise and Fiber Optic Wide Area Network Use Agreement. Subject to Washington state law and federal law and in all respects and without exception, the Transferee shall comply with the requirements of the Franchise, including all applicable ordinances, orders, contracts, agreements, commitments, side letters, and regulatory actions taken pursuant thereto, including, but not limited to, compliance with the Fiber Optic Wide Area Network Use Agreement, dated as of August 27, 2002 and as amended by First Amendment to the Fiber Optic Wide Area Network Use Agreement ( "First Amendment "), dated as of January 21, 2003 (collectively, as so amended, the "WAN Use Agreement "). The Transferee acknowledges that the change of control will not affect, diminish, impair or supersede the binding nature on Wave of the documents set forth in this paragraph. In all instances, the Transferee will continue with all current obligations of the existing franchise and the WAN Use Agreement and continue to provide the level of service provided for therein. Further, neither the services currently provided nor the service area currently served by Northland will be changed or altered in any significant manner by this transfer. 2. No City Waiver for any Unknown Pre - Closing Non - Compliance. Northland and the Transferee agree that the City does not waive and expressly reserves all legal rights and authority in regard to any and all undiscovered non - compliance under the Franchise and the WAN Use Agreement that may now exist or may later be discovered to have existed during the term of the Franchise prior to the transfer to Transfereee, even if whether discovered prior to or after the closing of the Transactions that are the subject of this acceptance. Transferee and Northland specifically accept the City's reservation of rights as set forth above. 3. In the event the transfer, which is the subject of this Acceptance, is not consummated or does not reach final closure for any reason, or in the event such closure is reached on terms substantially and materially different to the terms described in the FCC Form 394 and subsequent information provided by the Transferee and relied upon by the City, then Transferee acknowledges that the City's Ordinance, together with the written acceptance provided hereunder, shall be automatically null and void without further action by either party. If the closure is upon terms which are substantially and materially different, Transferee shall resubmit its request for a transfer in order to be in compliance with the Franchise. -6- 4. Reimbursement of Costs. Either Northland or the Transferee shall within thirty (30) days of the Closing reimburse all direct, out -of- pocket costs the City incurred in analyzing and acting upon Transferee's request to consent to the Transaction, in an amount up to $5,900.00, based upon invoices. 5. Performance Bond and Insurance. Wave and/or Holdings shall provide the performance bond and insurance in accordance with Section 7 of Ordinance No. 3138 in the form as previously approved by the City Attorney concurrent with filing its acceptance of this Exhibit A with the office of the City Clerk. 6. Acceptance. Northland, Wave and Holdings shall file their acceptance of this Exhibit A and Ordinance No. 3138 , with the office of the City Clerk including all terms and conditions thereof, which shall be signed and acknowledged by its proper officers. Northland Cable Television, Inc., Or its Successor ( "Northland ") CIZaregi Ri atQ incr . C)arIL By: Name: Title: Date: Esc -ect ttive Vice ►s etutt 3/0% WaveDivision III, LLC, a Washington limited liability company ( "Transferee ") By: Name: Title: Date: C tarK Exec 44- ve vice Pres44ijt --t 3 7 /v /d3 WaveDivision Holdings, LLC, a Delaware limited liability company ( "Transferee" By: Name: Title: Date: I'b ! 647 - 7 - Summary of Ordinance Adopted by the Port Angeles City Council on February 18, 2003 Ordinance No. 3138 This Ordinance of the City of Port Angeles, Washington, approves the transfer and assignment of the Cable Television Franchise Ordinance No. 3116 to operate a cable television system in the City of Port Angeles and the Fiber Optic Wide Area Network Use Agreement to fast -track construction of a portion of the institutional network by Northland Cable Television, Inc., to WaveDivision III, LLC and the subsequent transfer of control to Wave Division Holdings, LLC. The full text of the Ordinance is available at City Hall in the City Clerk's office or will be mailed upon request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. This Ordinance shall be deemed effective upon the closing of the assignment of the Franchise from Northland to Wave. Becky J. Upton City Clerk Publish: February 23, 2003 TTT